Takeaways:
- The most skillful agent will never narrow negotiations down to one issue.
- Prior to negotiating you should establish criteria by asking enough questions to find out the primary objectives and goals of the buyer and seller.
- Learn four negotiation tactics and the seller remedies for each.
If buyers and sellers are wondering why they need a real estate agent, it is for their negotiation skills, so let’s show them what we have instead of being fearful the deal will fall through and buckling.
What makes us professionals is our ability to close a deal from a first conversation with the other party — our ability to find an agreement on the terms and create a happy client the day after closing.
The most skillful agent will never narrow negotiations down to one issue (the price) because this allows for one winner and one loser versus both winning.
Prior to negotiating you should establish criteria by asking enough questions to uncover the primary objectives and goals of the buyer and seller.
Included in this criteria are financial needs, potential future relocation, cash needed to close, closing date, home warranty needs, persons living in the home, kids, animals, physical additions needed to the property, potential rent-back needs and more.
Negotiate all of these terms of the contract with these four strategies to create a win-win solution:
1. Nibbling
A strategy that buyers use to obtain the majority of what they are asking for by making the seller feel cheap. As the name explains, the buyer nibbles a bite here and a bite there — slowly getting everything they desire from the seller.
Example: The buyer is purchasing a $700,000 home and asks for a new roof, stating to the seller’s agent and seller, “Oh, come on — I am purchasing a $700,000 home from you, what does a new roof cost?” One by one, the requests come in nibbling away at the seller’s profit.
Seller remedy: Do not allow this. Sometimes sellers are so eager to liquidate the property and will meet the added conditions to complete the transaction.
Stand your ground and be willing to walk away in your mind, and your confidence will win most every time. If the buyer gets one large request granted, he will forgo the small stuff but will need to be told “no” to end the nibbling cycle.
2. Hot potato
A strategy when the buyer expresses details about a difficulty they are facing that will keep them from purchasing the home in question and throws the problem into the hands of the seller or listing agent to fix.
Example: The buyer is purchasing a $700,000 home and does not have quite enough money for a down payment, a personal issue is holding up the deal or the buyer does not qualify for that price at all.
Seller remedy: Do not allow this. In this scenario, the buyer’s challenges are passed on to the listing agent or seller and can be eliminated by standing firm and working through the challenges one by one.
Financing, personal issues, commissions, roadblocks and delays are all examples of issues that in a hot-potato scenario become the seller’s problem. Address the issue directly and logically, and hand the challenge back to the person responsible for it.
3. Good guy, bad guy
A strategy where the agent is the good guy in the relationship and the seller is the bad guy or vice versa (the higher power). Hiring a real estate agent is a way to protect buyers’ and sellers’ interests, as well as to provide a buffer from possible confrontations during negotiations.
Example: The buyer is purchasing a $700,000 home and has a running list of requests for the seller. The agent is accommodating, declaring the deal can be worked out, but every request seems to be vetoed by the seller only to be countered again. This tactic exhausts the buyer and their efforts, and they begin to withdraw.
Seller remedy: The success of this negotiating tactic is to allow the buyer to get one or two of his requests through. If the buyer feels they are not moving forward in any way, this tactic will truly sabotage the deal.
However, done correctly, the buyer will feel as though someone is on his or her side, that he or she is making progress, and giving up will not be an option when they have come so far.
4. The withdrawn offer
This strategy is when the seller takes the house “off the table” regarding willingness to sell. Most people want what they can’t have — it is human nature and drives them to be more competitive to get it. Home auction sites have become popular for this reason.
Example: Buyers who see a home that interests them are fully approved but decide just to hang out and wait to see if the house price drops.
Seller remedy: Submit the home to an auction site with an end date to create competition and desire for the home. Announce in the listing that all offers will be reviewed and decided on a certain date and time.
For more negotiating tactics you must know to beat your competition. Check out Roger Dawson’s “Secrets Of Power Negotiating.”
Cheryl Spangler is the principal broker and co-owner of FORBZ Real Estate Group located in Alexandria, Virginia (serving Virginia, D.C., and Maryland). You can follow her on Twitter or LinkedIn.
